Cruz, Kasich Spar on Bank Bailouts

Ted Cruz and John Kasich battled it out over the bank bailouts during Tuesday night’s GOP debate.

“When a bank is ready to go under and depositors are getting ready to lose their life savings, you just don’t say we believe in philosophical concerns,” the Ohio governor said at the contest hosted by Fox Business Network. “Philosophy doesn’t work when you run something. … We need an executive who’s been tried, has been tested.”

Cruz shot back, questioning why Kasich would support the ultra-wealthy and not average Americans.

Why would you then bail out rich Wall Street banks and not Mom and Pop?” Cruz asked.

Kasich argued that banks need to hold higher capital levels to reduce the need for a potential bailout, but Cruz kept up the pressure.

“What would you do if the bank was failing?” he asked.

“I would not let the people who put their money in there all go down,” Kasich replied.

He said he would “separate those people who can afford it versus those people who are the hard-working folks who put their money in those institutions,” a comment that drew boos from the audience. “When you are faced … with banks going under and people who put their life savings in there, you’ve got to deal with it. You can’t turn a blind eye there.”

For his part, Cruz said he would not take any steps as president to save a failing bank but suggested that the Federal Reserve could step in and use its powers as a lender of last resort to try and help save it.

The exchange between Kasich and Cruz was part of a broader debate about financial regulation during the debate.

Former Florida Gov. Jeb Bush blasted the Dodd-Frank financial reform law, arguing it heaps regulations on community banks while banks more resources can handle it. He also pushed for higher capital requirements for banks as a way to help protect against future bailouts.

Both Kasich and Bush have ties to Lehman Brothers, the investment bank whose collapse helped set off the 2008 financial meltdown. Kasich worked as a managing director for the bank’s Ohio office, while Bush worked as an adviser for the bank.

Sen. Marco Rubio (R-Fla.) also called for the outright repeal of Dodd-Frank.